By Nigam Arora & Dr. Natasha Arora
To gain an edge, this is what you need to know today.
Gold As An Early Indicator
Please click here for a chart of gold ETF (GLD).
Note the following:
- Here are the four major issues the market is facing today:
- Indian missiles hit Pakistan. This is critical because both countries are heavily armed with nuclear weapons.
- Formal talks between the U.S. and China are set to begin this weekend. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer are scheduled to meet with Chinese Vice Premier He Lifeng in Switzerland.
- The Fed will announce its rate decision at 2pm ET, followed by Fed Chair Powell’s press conference at 2:30pm ET.
- China is taking steps to replace the dollar with the yuan as the anchor of Asian currencies.
- The chart is useful as an early indicator for prudent investors on the four major issues of the day. The chart reflects the collective wisdom of investors across the globe. In our decades of experience in the markets, the collective wisdom is not always correct. Nonetheless, it is important to pay attention to it as it provides clues about investor positioning. Understanding investor positioning gives you a big edge. For those interested in next level information on positioning, listen to the podcast titled “Market Mechanics: Positioning.”
- The chart of gold ETF shows that even after Indian missile strikes on Pakistan in retaliation for a terrorist attack in India, gold is not rocketing. This indicates that the market believes the situation will deescalate.
- The chart of gold ETF shows that gold is not collapsing, even after the news of formal trade talks between the U.S. and China. This indicates that the market believes that in spite of positive headlines, the probability of trade talks producing more than what is already discounted in the markets is low. In The Arora Report analysis, after the rally, the stock market is already discounting a substantial reduction in China tariffs.
- The chart of gold ETF shows that the Fed is not likely to cut interest rates. Gold tends to move up ahead of interest rate cuts. Gold as an early indicator is saying that the Fed is not likely to bow to Trump by cutting interest rates today.
- Regarding China’s attack on the dollar, the People’s Bank of China bought gold for the sixth month in a row. The chart of gold ETF shows that this news is not moving gold higher. This indicates that in the short term, Chinese efforts to attack the dollar are already discounted in the markets.
- As an actionable item, the sum total of the foregoing is in the Arora Protection Band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the Arora Protection Band. The Arora Protection Band is one of the large number of unique edges that are available to members of The Arora Report.
Magnificent Seven Money Flows
In the early trade, money flows are positive in Amazon (AMZN), Meta (META), Tesla (TSLA), and Apple (AAPL).
In the early trade, money flows are neutral in Alphabet (GOOG), Nvidia (NVDA), and Microsoft (MSFT).
In the early trade, money flows are mixed in S&P 500 ETF (SPY) and Nasdaq 100 ETF (QQQ).
Momo Crowd And Smart Money In Stocks
The momo crowd is *** (To see the locked content, please take a 30 day free trial) stocks in the early trade. Smart money is *** in the early trade.
Note for new members: Smart money often sells into the strength generated by momo crowd buying and buys into the weakness generated by momo crowd selling. Over a long period of time, investors come out ahead by adopting smart money’s ways. The exception is in a raging bull market – for very short term trades, consider following the momo crowd and not smart money. Smart money is an important indicator but is only one of hundreds of indicators that go into determining the Arora Protection Band and signals. Please click here and here to understand how signals are generated.
Very Very Short-Term Indicator
The Arora Report’s proprietary very, very short-term early stock market indicator is ***. This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.
Gold
The momo crowd is *** in gold in the early trade. Smart money is *** in the early trade.
For longer-term, please see gold and silver ratings.
Oil
API crude inventories came at a draw of 4.49M barrels vs. a consensus of a draw of 2.5M barrels.
The momo crowd is *** oil in the early trade. Smart money is *** in the early trade.
For longer-term, please see oil ratings.
Bitcoin
Bitcoin (BTC.USD) is seeing buying.
Markets
Interest rates are ticking down, and bonds are ticking up.
The dollar is stronger.
Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.
S&P 500 futures are trading at 5648 as of this writing. S&P 500 futures resistance levels are 5748, 5926, and 6017: support levels are 5622, 5500, and 5400.
DJIA futures are up 224 points.
Gold futures are at $3395, silver futures are at $33.08, and oil futures are at $59.21.
Arora Protection Band And What To Do Now
It is important for investors to look ahead and not in the rearview mirror. The proprietary Arora Protection Band from The Arora Report is very popular. The Arora Protection Band puts all of the data, all of the indicators, all of the news, all of the crosscurrents, all of the models, and all of the analysis in an analytical framework that is easily actionable by investors.
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider holding *** in cash, Treasury bills, short term fixed income, or allocated to short-term tactical trades; and short to medium-term hedges of ***, and short term hedges of ***. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
